Chairman's Review

This is an extract from the 2010 Chairman's Review for Fresca Group Limited, the parent company of Mack.

A Word from the Chairman

This year has been one of the most challenging that I can recall. It's one that has required our people, more than ever, to be resourceful and committed.

We have continued to move the Group forward and to maintain our momentum, but I think that without exception, each of our businesses has faced hard choices this year. Choices required by virtue of economic climate, the vagaries of weather, changing retailer requirements and reviews of strategic direction.

Our established businesses have performed well in this testing year. Mack Multiples and Mack Wholesale once again produced consistently reliable results for the Group. MM Global Citrus and Manor Fresh, two of our joint venture businesses also produced good results and we saw a turnaround in the performance of Jack Buck Growers and ValeFresh, which is a credit to their management teams.

The programme of investment in new facilities continues apace. We have taken the opportunity to expand our Nursling site operations in Southampton, taking larger 'white box' space in the Aurora building that currently houses our fast-growing Ship Stores business.

Much of our Southampton wholesale business will be housed in this facility from now on, in temperature-controlled, purpose-built distribution facilities. Work is also underway on the neighbouring Mack Service facilities which will almost double our capacity for producing fresh prepared fruit salads. In addition, we have also acquired further space for Mack in Bristol, as well as acquiring a new business there in P J Down.

Considerable time and effort has been invested in the improvement of our service to the north of the country, Scotland and Ireland with the establishment of a direct shipping service from Spain and a fresh produce hub at Liverpool port. Beginning as a trial for the Spanish citrus season, we have found the site a great strategic benefit to Fresca, and this enabled us to open a new department under the Multiples umbrella for top fruit. It is some 10 years since Multiples last traded apples and pears, so it's a welcome return for us and an exciting new beginning. The benefits are clear both in terms of lower shipping costs and a reduction in road miles. The success of this operation has culminated with us acquiring the business which operates the produce hub, Liverpool Produce Terminal, in July 2010.

One area of the industry from which Fresca has been notably absent is prepared vegetables. However, we have now acquired a vacant facility on the Jack Buck Growers site in Holbeach, and following a refurbishment programme we are beginning prepared vegetable production and look forward to developing the challenge of this new part of the business.

Trading at Thanet Earth Marketing has been tough. We have just completed our first full year of trading here and it proved to be a much bigger challenge than we had anticipated. Issues included late completion of the packhouse, high start-up costs, a weak pound driving up the cost of inputs, an extremely weak summer salad market and a very steep learning curve for a team managing a very sizeable new business. On the plus side we delivered our customers excellent products and high service levels.

Early financial indications for this year are much mroe encouraging and I maintain confidence in the development and in the extremely positive feedback that the products and service elicit from retailer and end customer alike. I believe that the most difficult times are behind us for Thanet Earth and there's a very tangible sense of positivity.

Our businesses have all shown their adaptability and resolve to maintain their forward momentum. We shape ourselves around opportunity, without allowing complacency or stagnation. The business stands in good overall shape. We have a diverse customer base and now reach into every major UK multiple retailer for fresh produce.

Sourcing continues to be dynamic and strong, with some innovative new types of trading relationship emerging with key suppliers overseas and more people than ever placed strategically 'on the ground'.

We will continue to refocus our activities into areas where we believe we can add real value in the long term, moving both up and down the supply chain, getting closer to how our products are grown and how we best get them to market.

In the short-term, our objective is to provide support to Thanet Earth Marketing so it can move into profitability whilst maintaining the underlying performance or our core businesses. I am pleased to report that at the end of the first three months' trading, we are on track to achieve this.

Once again, I need to thank every one of the 1,082 people employed by the enlarged Fresca Group. I thank you for your commitment and dedication to the products and service for which we're so well known, and for the part you play in keeping us at the forefront of the industry.